Tips Industries Ltd has informed that in the limited review report of the Company for the quarter ended June 30, 2007, the auditors of the Company have made the following observations:
1. Without qualifying the auditors opinion, they draw attention to:
i. The Auditors have relied upon management representation regarding expected total revenue horn exploitation of film rights, based on which cost of production is charged to the profit and loss account.
2. In the absence of records of title wise stock, cost of copyrights and in-house music production cost are apportioned as overheads in the valuation of finished goods on an average basis, the impact of which on profit is not ascertainable. (Cost apportioned during the quarter of Rs 80.19 lacs). Accordingly, the valuation of inventories is not as per the Accounting Standard - 2 Valuation of Inventories.
3. The Auditors rely on management representation regarding:
a. Recoverability of advances against film production / distribution of Rs 401.94 lacs & other advances of Rs 228.20 lacs.
b. Non-provision of fringe benefit tax of Rs 10.43 lacs on eligible expenses incurred in production of films, based on the experts opinion referred to in Note no 8 of the notes to the Statement.
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